Minister Delegated Power to Ban Entire Product Categories

The Iceland Chamber of Commerce has reviewed the draft bill on nicotine and tobacco protection. The Chamber submitted a joint response on the matter with the Confederation of Icelandic Enterprise at the concept stage in 2025 and again on earlier drafts of the bill in August of the same year, and refers to those responses as applicable.[1]

The draft bill entails far-reaching changes to the operating environment of companies that manufacture, import and sell legal nicotine products. Under the bill, nicotine products would be brought under new comprehensive legislation on tobacco and nicotine protection, currently governed by Act no. 87/2018. The draft bill provides, among other things, that the manufacture of nicotine products shall be subject to licensing and that sales through online retailers shall be restricted. It also provides that the minister shall be granted broad powers to determine restrictions on flavourings and the packaging of nicotine products.

Restriction of Commercial Freedom Requires Proportionality

The Iceland Chamber of Commerce notes that, if passed, the draft bill would entail a further restriction of commercial freedom, which is protected under Article 75 of the Constitution. Restrictions on commercial freedom must always be founded on substantive and reasoned grounds and must comply with the principle of proportionality. On that basis alone, the Chamber urges caution regarding the changes proposed in the draft bill. Given that numerous public-health measures have already been introduced — such as age restrictions, visibility and advertising bans, localised restrictions on use, and a substantial increase in the nicotine levy — the Chamber considers it premature to embark on measures of such scope and burden at this time.

Regarding the bill’s objective of preventing children and young people from using nicotine, it is worth reiterating that nicotine is already prohibited for those under the age of 18, and the Chamber fully supports robust enforcement of that ban. However, it opposes addressing young people’s consumption of nicotine products by restricting the freedom of choice of those of legal age to consume the same products.

It is also difficult to justify subjecting nicotine products that contain no tobacco to the same legislation as conventional tobacco products. Since tobacco-free nicotine products are generally regarded as a less harmful alternative to conventional tobacco products, the Chamber considers that the legislation ought to reflect that distinction. Treating these products as equivalent could reduce consumers’ incentive to switch to less harmful alternatives, thereby undermining genuine public-health objectives.

Excessive Delegation of Power to the Minister

Article 39 of the bill lists 38 regulatory authorisations, bringing the total number of authorisations to nearly fifty. The most substantively significant decisions are thus transferred from the legislature to the minister. Under Article 14(2) of the draft, the minister may restrict the sale and import of nicotine products on the basis of flavourings, without the legislation containing adequate criteria for which flavourings fall within that scope. It is further proposed that the minister be authorised to reduce the permitted maximum strength of nicotine by regulation, without any minimum limit, while the maximum strength of nicotine pouches is determined entirely by regulation pursuant to Article 11(1) and (3). The explanatory notes also state that the minister may, on the basis of the general regulatory authorisation in Article 16(8), require standardised packaging for nicotine products, even though the requirement for such packaging was removed from the legislative text itself following consultation.

If the bill were passed in its current form, the minister would effectively be delegated the power to ban entire product categories, wipe out the value of trademarks, and deprive retailers and wholesalers of their operating basis by regulation alone. That is poorly compatible with the principle of legality in administrative law and the requirement of Article 75 of the Constitution that restrictions on commercial freedom be determined by statute.

Ban on Online Sales is Ill-Targeted

Under Article 24(2), delivery by a third party to the purchaser, such as home delivery, is prohibited; cross-border distance sales are banned under paragraph 3; and domestic online sales may be further restricted by regulation pursuant to paragraph 7. The Chamber of Commerce opposes these restrictions and notes that a ban on online sales would curtail commercial freedom and consumers’ ability to engage in lawful trade in legal goods. Such restrictions reduce competition, raise prices and encourage attempts to seek out informal or even unlawful online retail.

Conflicts of Interest and Burdensome Penalties

The bill provides that ÁTVR (the State Alcohol and Tobacco Company of Iceland) shall be granted a sweeping supervisory and licensing role and may impose administrative fines on legal entities of up to ISK 25 million, regardless of whether the infringement is committed intentionally or negligently, pursuant to Article 36(2) and (6). Daily fines may amount to up to ISK 500,000 per day under Article 29(2), and offences may be punishable by imprisonment of up to two years under Article 34. At the same time, ÁTVR holds a statutory monopoly on the wholesale of tobacco under Article 7 of Act no. 86/2011 and itself manufactures snuff. Under the bill, the same authority is to grant and revoke retail licences, carry out supervision, impose daily fines and administrative penalties, and receive sensitive commercial information from manufacturers and importers under Articles 12 and 13, including regarding products that compete with the activities from which the authority itself benefits. As such an integration of commercial interests and supervisory powers within a single public authority is undesirable, the Chamber of Commerce recommends that the supervisory function be located with a different public authority.

The Draft Bill Requires an Impact Assessment and Revision

It may also be noted that nearly all the costs of implementing the legislation are borne by businesses through various charging powers, and that the transitional periods included in earlier drafts have largely been removed following consultation. Such implementation is incompatible with both the principle of proportionality and the legitimate expectations of those engaged in lawful business.

In this context, it is a matter of criticism that the section of the bill’s explanatory notes dealing with the impact assessment is still marked as work in progress, for the second year in a row — the Chamber of Commerce raised the same point in its response to the earlier draft of the bill. A bill that entails restrictions on commercial freedom and property rights of such breadth, without an adequate assessment of the impact on businesses, consumers and the public finances, does not meet the standards required of quality legislation.

In light of all the foregoing, the Iceland Chamber of Commerce opposes adoption of the bill in its current form. The Chamber urges the authorities to revise the draft in light of the considerations set out above and to prioritise a thorough assessment of the impact of existing legislation and measures before embarking on further burdensome legislative action.